Mortgage Rate Forecast for June 4, 2010
Here are some of the events affecting mortgage rates today:
What Mortgage Backed Securities Are Doing Today:
- The price of the FNMA 30-Year 4.5% MBS coupon opened at 102.06 this morning - the same as yesterday's close.
- At 9:30 AM, the 4.5% MBS coupon was trading at 102.53 - up 15/32 from its opening
Remember, on mortgage backed securities (MBSs), as the price goes up, the yield comes down - and so do mortgage rates. I expect that mortgage rates will be up to 0.50 points better in price this morning as compared to yesterday.
Price Trend in Mortgage Backed Securities:
The chart below shows the price trend of the FNMA 30-Year 4.5% coupon over the past 30 days from 5-5-2010 to 6-4-2010:
Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:
- Employment Situation Report - according to the Bureau of Labor Statistics, non-farm payroll increased by 430,000 in May, but only 41,000 of those new jobs were in the private industry. This is much less than the 540,000 gain that was expected, and follows a gain of 290,000 jobs in April, and a gain of 208,000 jobs in March. The unemployment rate decreased to 9.7%. The labor market is showing notable improvement, and could help consumers regain optimism which in turn will strengthen the overall recovery. This data had a positive impact on the mortgage market this morning as prices of mortgage backed securities rose on the news. This lead to lower mortgage rates this morning.
Trend in Mortgage Rates:
The chart below shows the trend in mortgage rates over the past year:
Mortgage Rate Lock Advice:
Mortgage rates are no longer at their lows of 2010. Yesterday, the price of the FNMA 30-Year 4.5% Coupon closed within 60 basis points of its all-time high of 102.69 which was on November 30, 2009. This morning, the MBS coupon was within 16 basis points of that all-time high. As a comparison, what that means is this: if a 30 year fixed mortgage rate was 4.750% with no points yesterday, and if price of the MBS 4.5% coupon were to go as high as 102.69, then the best the 30 year fixed mortgage rate would be is 4.625% with 0.875 point today.
Mortgage rates were already at their lows for 2010. While it's still possible that mortgage rates could go lower again with the ongoing economic crisis in Europe as well as the housing market crisis in China, it won't be by much, and I would not risk the chance waiting for it.
If I was closing within the next 5 - 7 days, I would lock in the rate.
If you are closing in more than 7 days, send me an email to get my rate lock advice.
Be sure to check out today's mortgage rates.
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The mortgage rates of today are truly phenomenal. Great report, Lew.
Kathryn - prices of mortgage backed securities right now are at an all-time high. Translation, rates are the lowest they've ever been. Advice? Lock in! This won't last.
Lewis,
Hopefully those employment numbers will continue on a positive path which will then help lift the housing market out of the gutter.
Esko - one would hope. However, almost all of the increase in jobs is in the government sector, not in the private sector. Until companies start hiring, we're not going to see any improvements in the economy or in housing.